Findings from Harvard Medical School Broaden Understanding of Health Economics (Improving the Performance of Risk Adjustment Systems Constrained Regressions, Reinsurance, and Variable Selection): Economics – Health Economics

2022 FEB 11 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- New research on Economics - Health Economics is the subject of a report. According to news reporting out of Boston, Massachusetts, by NewsRx editors, research stated, “Modifications of risk adjustment systems used to pay health plans in individual health insurance markets typically seek to reduce selection incentives at the individual and group levels by adding variables to the payment formula. Adding variables can be costly and can lead to unintended incentives for upcoding or service utilization.”

Our news journalists obtained a quote from the research from Harvard Medical School, “While these drawbacks are recognized, they are hard to quantify and difficult to balance against the concrete, measurable improvements in fit that may be achieved by adding variables to the formula. This paper takes a different approach to improving the performance of health plan payment systems. Using the HHS-HHC V0519 model from the Marketplaces as a starting point, we constrain fit at the individual and group levels to be as good or better than the current payment model while reducing the number of variables in the model. We introduce three elements in the design of plan payment: reinsurance, constrained regressions, and machine learning methods for variable selection.”

According to the news editors, the research concluded: “The fit performance of our alternative formulas with many fewer variables is as good or better than the current HHS-HHC V0519 formula.”

This research has been peer-reviewed.

For more information on this research see: Improving the Performance of Risk Adjustment Systems Constrained Regressions, Reinsurance, and Variable Selection. American Journal of Health Economics, 2021;7(4):497-521. American Journal of Health Economics can be contacted at: Univ Chicago Press, 1427 E 60TH St, Chicago, IL 60637-2954, USA.

Our news journalists report that additional information may be obtained by contacting Thomas G. McGuire, Harvard Medical School, Dept. of Health Care Policy, Boston, MA 02115, United States. Additional authors for this research include Anna L. Zink and Sherri Rose.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1086/716199. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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